Fine print of an insurance fraud in Telangana

As dawn breaks over Hyderabad, before the first tea stalls steam to life, hundreds of sanitation workers are already at work, their brooms combing the city to prepare it for the day’s bustle. For 58-year-old Nethetla Pochamma, a single mother and an outsourced worker with the Greater Hyderabad Municipal Corporation, it wasn’t just a job—it was her lifeline.

With a thick mark of vermilion on her forehead, she swept the streets with a quiet resolve. The work meant food on the table and a semblance of stability. But on the morning of August 23, 2022, her life came undone in seconds.

While working in KPHB Colony, she was struck by a college bus on Pragathi Nagar-JNTU Road. The impact splintered her bones and hurled her onto the asphalt she had spent years tending. Though she was rushed to one hospital after another, no amount of medical intervention could undo the damage. Pochamma succumbed to her injuries hours after the incident.

Life on the streets she had cleaned for years carried on as usual but it froze for her daughter, 36-year-old Netetla Malleswari. Alongside the pain of losing her mother came another battle—a relentless fight for an insurance claim, one that has stretched for over 32 months now.

“The case is under trial,” says her lawyer. “Even with clear evidence, it could take another four or five months for a breakthrough, if any. The insurance policy of the vehicle involved was bogus.”

As unending trips to government offices, unanswered calls and mountains of paperwork consume her life, Malleswari sinks deeper into the maw of an insidious scam, one quietly devouring thousands of victims across Telangana.

Sold with slick documents and tall promises, fake vehicle insurance policies are turning roadside tragedies into financial abysses, leaving families stranded without compensation and no recourse.

Every month, insurance companies in the two Telugu States alone uncover 8-10 fake vehicle insurance claims and, as per industry sources, over 50,000 counterfeit policies are already in circulation.

Yet, this crisis is unfolding in a market poised for growth. India remains vastly noninsured, with a total insurance penetration of just 3.7% as of fiscal 2024. Non-life insurance, of which motor insurance is a key part, is estimated to be 1%.

An official from the Insurance Regulatory and Development Authority of India (IRDAI), seeking anonymity, pointed out that despite the mandatory third-party motor vehicle insurance cover, nearly 60% of vehicles remain uninsured. This massive coverage gap fuels fraud, making it easier for scammers to target the unaware.

Unscrupulous lawyers deepen pain

For Ranipet Shiva Kumar, a resident of Hyderabad’s Yousufguda, the scam did not just steal money—it turned his injured father’s suffering into an endless cycle of despair. While Malleswari has spent years pursuing a compensation that remains elusive, Shiva’s family suffered a deeper betrayal. They were offered justice—only to be misled, again and again.

His father, 49-year-old Bala Nagayya, had laboured for months under Hyderabad’s harsh sun, laying asphalt along the bustling stretch from IIIT to Wipro Junction in Hyderabad’s IT corridor.

On December 5, 2022, just outside Gate Number 2 of Microsoft’s office, he was hit by a cab. The impact shattered his left leg and cracked the back of his skull. Hospital bills climbed to ₹95,000—an impossible sum for a daily-wage family. They left Hyderabad, retreating to their village in Mahabubnagar, over 100 kilometres away.

When they returned a year later, Nagayya no longer had the strength for full-time work. His firm, which had earlier promised to help him, refused to take him back. Jobs came sporadically—barely 15 days a month.

Even as poverty tightened its grip around the family, a phone call kindled a flickering hope. It was a lawyer, offering help to make an insurance claim. “We thought we could at least pay off the hospital bills,” Shiva smiled, pain visible in his eyes.

The lawyer asked for ₹10,000 upfront, promising not to demand any more. Once the claim is settled, he would take 15% of it as his cut, he had said. After a few weeks’ silence, however, he demanded another ₹15,000, twisting the knife of optimism in a desperate family. Shiva and other family members scraped together the sum.

But just days later, the lawyer shrugged them off with a smirk: “It’s a fake policy; you won’t get a single rupee.” More lawyers followed with the promises of ₹3 lakh, ₹1.5 lakh and ₹1 lakh: numbers thrown around like lifelines, only to be yanked away. Not a single rupee ever reached the family.

Now a delivery agent, Shiva still keeps a folder with copies of receipts, medical reports and lawyer contacts. “Not because I think we’ll get the money,” he says, “but because it’s all I have left from this fight.”

The scam preys on grief, turning the vulnerable into easy targets. “Many lawyers exploit accident victims by making false promises of compensation,” says Thirupathi Pandila, Fraud Control Unit (FCU) Manager at Magma General Insurance Ltd. “They string victims along, extract money on the pretext of fees and then abandon them with nothing. Even for us in the insurance industry, it’s a challenge reaching these victims—many unknowingly submit fake documents and are devastated when the truth emerges.”

For families like Shiva’s and Malleswari’s, the accident lasted seconds, but the damage stretches across years, with no end in sight.

Pervasive scam

What started as a handful of scattered complaints has turned out to be something far more sinister—sprawling fraud networks preying on vehicle owners across Telangana and beyond. The Telangana Crime Investigation Department (CID) now sees the cases as the workings of a full-fledged fraud industry.

In 2025 so far, the Telangana police have dismantled two major fake insurance policy rackets operating in the heart of Hyderabad. In Shamshabad, three men were arrested with 22 fake insurance policies, some printed in the names of top insurers such as Bajaj Allianz, HDFC-ERGO, ICICI-Lombard and Tata AIG. A few kilometres away in Shabad, officers seized 31 more forged documents, along with laptops used to create them.

In a separate case, a complaint filed by Bajaj Allianz General Insurance led police to uncover more than 140 counterfeit policies.

“The racket thrives on word-of-mouth and referrals, mostly targeting commercial vehicle owners,” says Shabad police Inspector B. Kantha Reddy, who has been investigating the case. “It’s a low-cost, high-reward operation—just a laptop, a printer and some basic editing skills are enough to create convincing forgeries. But this group went a step further, printing high-quality copies on bond paper to make them indistinguishable from the real deal.”

K. Vasudev Raju, a solicitor from Hyderabad, says it’s difficult for victims of fake insurance policies to obtain legal aid. “By the time one realises that the policy they have is fake, the agent will have disappeared. The police don’t show much interest unless the fraud runs into several lakhs of rupees, and the courts have no system to keep track of such cases.”

He added that these scams are disturbingly common. “I’ve seen people buying policies from agents sitting outside petrol stations or Regional Transport Offices (RTOs). I know someone who took a fake insurance policy from outside the Trimulgherry RTO and was upset on discovering it was bogus.”

P. Mrinal, risk control unit manager at Reliance General Insurance, says he has seen such documents. “They look shockingly real—neatly packed in transparent sleeves like genuine documents,” he said. “But a closer look lays bare the flaws—mismatched figures, calculation errors and even outdated terms such as ‘service tax’ instead of the GST. Many of these forgeries are just old 2017–2018 policy copies with minor edits.”

In some cases, fraudsters even go as far as adding QR codes to make them look legitimate, but those often redirect to irrelevant websites instead of actual policy records, he added.

The scam has infiltrated smaller towns and rural districts as well. Investigations launched by police based on complaints lodged by insurers have traced fraudulent policies to Devanpally, Gandhari and Kamareddy. The police now believe the networks have operated undetected for at least three years.

According to Abhimanyu Sharma, business head–motor vehicle insurance at Policybazaar, Telangana is among the several States witnessing a spike in such scams. Similar incidents have been reported in Tamil Nadu, Kerala, Madhya Pradesh, Rajasthan and Gujarat. “The worst-hit areas are those with low internet penetration,” Sharma explained. “Fraudsters thrive where awareness is low. They pose as authorised agents, collect cash payments and make sure the transactions remain untraceable.”

Vikramjeet Singh, president and chief human resources officer at Bajaj Allianz General Insurance, added: “Many consider motor vehicle insurance as a formality. This makes them easy targets for fraudsters, leaving them financially exposed, especially in serious third-party claims, where compensation can run into crores of rupees.”

RTOs are the favourite hunting grounds of the fraudsters. “They target vehicle owners who come for renewal of fitness certificates, permits and name transfers—people who might not have valid insurance at the time. Since insurance is mandatory for these transactions, they become easy prey,” explains Mrinal.

Commercial vehicle owners, who are often desperate to cut costs, are the common victims of the fraud. The bait is simple: heavy discounts, he adds.

Dressed in casual clothes and riding two-wheelers, fake insurance agents often wait outside RTO offices, targeting unsuspecting vehicle owners right from the parking lots. Victims and genuine agents say the two-wheeler’s boot doubles as their “office.” Once they hook a customer, they relay details to accomplices stationed in some other part of the city, who swiftly generate forged policies and send them on WhatsApp to the agents, who pass them on to victims.

According to police, a vehicle covered by a fake insurance policy is considered uninsured in the eyes of the law. In the event of an accident causing injury or death, the vehicle owner is personally liable to compensate the victim. Moreover, if it is proven that the owner knowingly used or submitted a fake insurance document, they can face criminal charges—including cheating, forgery, and misrepresentation. In some cases, even if the fake policy was unknowingly purchased, courts may still hold the owner liable for compensation and direct them to pay the insurance premium or damages.

How to fight the scam

With thousands of fake policies in circulation, experts stress the need for public awareness. Knowing the minimum premium requirements for different vehicle segments could be the first step.

According to data shared by Policybazaar, for private cars, third-party insurance premium ranges from ₹2,471 for vehicles with engine capacity below 1,000cc, ₹4,131 for those between 1,000cc and 1,500cc, and ₹9,318 for cars exceeding 1500cc.

Two-wheeler premiums are lower but vary significantly—₹635 for vehicles under 75cc, ₹843 for 75–150cc, ₹1,613 for 150–350cc and ₹3,309 for anything above 350cc.

When it comes to commercial vehicles, goods carriage vehicles can have premiums ranging from ₹3,300 to as high as ₹55,000 depending on their capacity, while passenger-carrying vehicles (PCVs) fall in the ₹3,000 to ₹1,00,000 range.

Being aware of these standard rates can help consumers identify fraudulent offers that promise unrealistically low premiums.

Sharma advises that consumers should cross-verify their insurance details on the government’s Parivahan portal. “If your policy isn’t listed there, that’s a red flag. You should immediately report it to the insurance regulator,” he said, adding that insurers, upon receiving genuine policy opening request, also send a Know Your Customer (KYC) verification message to the customer’s registered mobile number.

Sharma says that insurance fraud also places the system under pressure and erodes public trust. “Scams like these contribute to the perception that insurance firms don’t honour claims. In reality, we strive to settle genuine claims—but the need to filter out fraudulent ones can sometimes lead to mistrust,” said Sharma.

The IRDAI has also introduced a tech-first, zero-tolerance approach to fight the scams. Insurers are now mandated to upload policy data to the Parivahan portal, enabling real-time verification by vehicle owners. AI-powered tools are being deployed to detect anomalies at the policy issuance stage itself, flagging potential fraud early.

To institutionalise a crackdown on fake insurance policy racket, the IRDAI has rolled out ‘Insurance Fraud Monitoring Framework Guidelines, 2024’, which mandates insurers to set up dedicated anti-fraud cells, craft formal anti-fraud policies and closely coordinate with police and courts.

Insurance companies are working closely with RTOs and local police to ramp up awareness efforts through educational campaigns, regular email alerts and informational resources aimed at helping policyholders identify red flags and protect themselves from scams.